Question: If aggregate demand falls below total output/production (AD

If aggregate demand falls below total output/production (AD

5. Continuing the example from question 4, as a consequence of the drop in aggregate demand, what will happen to the economy as a whole?

6. Assume a simple, closed economy with no government. The marginal propensity to consume (mpc) = 0.75. Then the value of the multiplier is:

a. 1.34 b. 0.57 c. 4 d. 1.75 e. 0.25

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